In the context of RFM, the [M.sub.n] represents the average of the actual requirements (M) for n repairs, while m represents the replacement factor. If the assumption is made that the past demands used in the replacement factor are an accurate predictor of the future, then n is also the future average demand rate per repair.
Figure 5 shows the results of a simple simulation of 1,000 runs, for an item with a quantity per assembly of ten and a replacement factor of five.
Alternatively, a second potential solution exists in the form of a modified replacement factor.
Recall that the replacement factor is an average, meaning that it will be insufficient about 50 percent of the time.
Because the replacement factor in the BOM is an average, RFM's forecasts will be either too high or too low almost all the time.
Additionally, as part of the last re-baselined product in 2012, the improved Best
Replacement Factors (BRFs) that had not been updated since 2010, were included.